Aging baby boomers, worker preferences driving more U.S. employers to explore phased-retirement programs
One out of three older workers in the United States would continue working longer than otherwise planned if their employer offered a phased retirement program. But many employers have yet to establish formal or informal arrangements — such as shorter work weeks, flexible hours or the opportunity to try something new — that would encourage older workers to delay full retirement, according to consulting firm Watson Wyatt.
The study, which surveyed 1,000 workers at or near retirement age in the U.S., looked at why and how workers phase into retirement, how phasing affects the age at which workers fully retire and the implications for employers.
"Worker attitudes about retirement are changing dramatically, and employers have some catching up to do," said Janemarie Mulvey, assistant director of Watson Wyatt's research and information centre and one of the study's authors. "We found that a significant gap exists between what older workers are looking for and the opportunities employers provide. For example, a majority of survey participants would like to work fewer hours late in their careers, but less than half of them expect their employer to offer this opportunity."
Why phased retirement?
According to the survey, more than half (57 per cent) of current workers in phased retirement entered into the arrangement voluntarily to have more leisure time. When asked their primary reason for choosing phased retirement instead of full retirement, 42 per cent said they enjoyed their work while 28 percent said they needed the income.
One-third (32 per cent) of workers in phased-retirement arrangements retired completely but later re-entered the workforce after becoming disillusioned with retirement. In contrast to voluntary phasers, 40 per cent of this group said they returned to work primarily because they need the income while only 34 percent said they work because they enjoy it.
About 10 per cent of workers currently in a phased status were forced into phased retirement when their jobs were eliminated. A majority of these workers (58 per cent) said they are working in retirement primarily for the income.
"What was once a three-legged stool of individual retirement income is quickly becoming a four-legged stool, with income from wages constituting the fourth leg," said Mulvey. "But it is important to note that extra income is not always the key motivator for phasers — many work because they enjoy it."
How do workers phase?
When asked how they would like to phase into retirement, many older workers said they hope to work part-time (63 per cent) or work more flexible hours (48 per cent) before retiring completely. Nearly two-thirds (63 per cent) of current workers aged 50 and older said they would like to phase into retirement in an entirely different career. Among current “phasers,” 80 percent work flexible hours and 79 per cent work part-time. Two-thirds (67 per cent) have less responsibility in their current job compared with their career job.
"Although some phasers leave their career employers to pursue an entirely different line of work, many leave to perform similar work with a competitor, but with more job flexibility," said Valerie Paganelli, a senior consultant with Watson Wyatt. "This survey reveals that employers can still do a lot more to preserve the hard-won talent and experience of their career employees."
According to Watson Wyatt, even an informal phased retirement program can go a long way toward retaining experienced workers. Among workers currently in a phased retirement arrangement with their career employers, 82 per cent had been offered the opportunity to work part-time and 71 per cent had the opportunity to work a more flexible schedule. On the other hand, among those who left their employer to phase elsewhere, only 16 per cent would have been allowed to work part-time for their career employer and only 20 per cent would have been offered a more flexible work schedule.
Delaying full retirement
The opportunity to phase has significant implications for the timing of workers' retirement, according to Watson Wyatt. Nearly one-fourth of survey participants already in phased retirement programs expect to work past age 65, while another 20 per cent do not plan to retire at all. One out of three older workers said they would continue working longer than otherwise planned if their employer offered a phased retirement program.
"As the economy recovers and baby boomers reach traditional retirement ages, labour shortages will re-emerge as an important issue," said Paganelli. "Employers would be wise to consider phased-retirement strategies that address older workers' needs and that will help maintain an adequate supply of talent and experience in the years to come."
The survey report, Phased Retirement: Aligning Employer Programs with Worker Preferences, is based on the responses of Americans between the ages of 50 and 70. They include full-time workers who are approaching retirement, workers currently in a phased-retirement arrangement and those who are fully retired.
The study, which surveyed 1,000 workers at or near retirement age in the U.S., looked at why and how workers phase into retirement, how phasing affects the age at which workers fully retire and the implications for employers.
"Worker attitudes about retirement are changing dramatically, and employers have some catching up to do," said Janemarie Mulvey, assistant director of Watson Wyatt's research and information centre and one of the study's authors. "We found that a significant gap exists between what older workers are looking for and the opportunities employers provide. For example, a majority of survey participants would like to work fewer hours late in their careers, but less than half of them expect their employer to offer this opportunity."
Why phased retirement?
According to the survey, more than half (57 per cent) of current workers in phased retirement entered into the arrangement voluntarily to have more leisure time. When asked their primary reason for choosing phased retirement instead of full retirement, 42 per cent said they enjoyed their work while 28 percent said they needed the income.
One-third (32 per cent) of workers in phased-retirement arrangements retired completely but later re-entered the workforce after becoming disillusioned with retirement. In contrast to voluntary phasers, 40 per cent of this group said they returned to work primarily because they need the income while only 34 percent said they work because they enjoy it.
About 10 per cent of workers currently in a phased status were forced into phased retirement when their jobs were eliminated. A majority of these workers (58 per cent) said they are working in retirement primarily for the income.
"What was once a three-legged stool of individual retirement income is quickly becoming a four-legged stool, with income from wages constituting the fourth leg," said Mulvey. "But it is important to note that extra income is not always the key motivator for phasers — many work because they enjoy it."
How do workers phase?
When asked how they would like to phase into retirement, many older workers said they hope to work part-time (63 per cent) or work more flexible hours (48 per cent) before retiring completely. Nearly two-thirds (63 per cent) of current workers aged 50 and older said they would like to phase into retirement in an entirely different career. Among current “phasers,” 80 percent work flexible hours and 79 per cent work part-time. Two-thirds (67 per cent) have less responsibility in their current job compared with their career job.
"Although some phasers leave their career employers to pursue an entirely different line of work, many leave to perform similar work with a competitor, but with more job flexibility," said Valerie Paganelli, a senior consultant with Watson Wyatt. "This survey reveals that employers can still do a lot more to preserve the hard-won talent and experience of their career employees."
According to Watson Wyatt, even an informal phased retirement program can go a long way toward retaining experienced workers. Among workers currently in a phased retirement arrangement with their career employers, 82 per cent had been offered the opportunity to work part-time and 71 per cent had the opportunity to work a more flexible schedule. On the other hand, among those who left their employer to phase elsewhere, only 16 per cent would have been allowed to work part-time for their career employer and only 20 per cent would have been offered a more flexible work schedule.
Delaying full retirement
The opportunity to phase has significant implications for the timing of workers' retirement, according to Watson Wyatt. Nearly one-fourth of survey participants already in phased retirement programs expect to work past age 65, while another 20 per cent do not plan to retire at all. One out of three older workers said they would continue working longer than otherwise planned if their employer offered a phased retirement program.
"As the economy recovers and baby boomers reach traditional retirement ages, labour shortages will re-emerge as an important issue," said Paganelli. "Employers would be wise to consider phased-retirement strategies that address older workers' needs and that will help maintain an adequate supply of talent and experience in the years to come."
The survey report, Phased Retirement: Aligning Employer Programs with Worker Preferences, is based on the responses of Americans between the ages of 50 and 70. They include full-time workers who are approaching retirement, workers currently in a phased-retirement arrangement and those who are fully retired.
